Citrix
(ticker: CTXS) preannounced that its third quarter came in roughly $26 million below the consensus revenue estimate and four-to-five cents below the consensus earnings-per-share estimate. The company did not cite any reason for the shortfall or make any comment regarding the full-year outlook.

This has been a tough year in the core desktop business, with desktop license down 5% in the first half on problems with Europe, a transition to combined mobile and desktop sales, and overall weaker desktop demand, offset by very strong growth in networking.

Third-quarter revenue is expected to be $710 million-$712 million versus guidance of $730 million-$740 million and consensus of $737 million. Citrix did not comment on 2013 guidance, which had been $2.960 billion-$2.980 billion with consensus at $2.975 billion and our estimate considerably lower at $2.956 billion.

Management did not attribute the miss to any vertical, geography, or product line. That said, the magnitude of the miss suggests, unlike prior quarters where NetScaler bailed out weaker desktop performance, that the weakness may have been broader based and included greater-than-expected slowing in NetScaler.

Given weakness in Europe from
Red Hat
(RHT) reported in the August quarter, we would assume Europe contributed here as well. If there is weakness in NetScaler beyond slowing from the first half's torrid 53% growth, we don't know, but we could guess at several issues outside of macro, including weakening "attach" contribution as desktop continues to slow, trends among large cloud providers to move to nonbranded infrastructure, and a signs of reinvigorated competition from
F5 Networks
(FFIV). Lastly, while we believe NetScaler joining the
Cisco Systems
(CSCO) price list as part of the Application Control Engine (ACE) sunset program is a positive, it sounds as if it adds complexity and conflict to a channel already discomforted by incentive and account changes over the last few years.

We are lowering third-quarter revenue and non-GAAP EPS estimates to $711 million and 69 cents, respectively, from $737 million and 72 cents. We are maintaining fourth-quarter non-GAAP EPS of $1.00, which was well below Wall Street's $1.09, and slightly raising what was our below-consensus revenue forecast of $817 million to $819 million on the assumption that some small amount of missed deals push to the fourth quarter.

-- Michael Turits -- James Wesman

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